Platform as a Service (PaaS) is a business wherein a third-party provider delivers software, tools, and hardware, particularly those used for the development of applications, to users via the Internet.
Calculating R & D Tax Credit As Part of PaaS Tax Planning
Like other companies focused on technology, PaaS companies may spend a lot of capital on research, development, and innovation. If that’s the case, considering the research and development tax credit may be highly advantageous.
This tax credit may allow a PaaS company accountant to write off expenses the company incurred when developing or improving a product.
PaaS Accounting Tips
One of the positive impacts the Tax Cuts and Jobs Act of 2017 has had on PaaS accounting is that it indirectly increased research and development tax credits after-tax benefit because it lowered the corporate tax rate down to 21 percent. This law got rid of the corporate alternative minimum tax. This gave companies more freedom to take advantage of research and development tax credits.
Another impact of the Tax Cuts and Jobs Act is that it limits businesses in the amount of net operating losses they can deduct if these were generated after December 31, 2017. However, a business may be able to offset up to 80 percent of taxable income by using the net operating losses they incurred after 2017. A good PaaS company tax minimization planning strategy could be to take advantage of the research and development tax credit and apply it against a balance of taxable income that can’t be offset with net operating losses. Our team of PaaS company CPAs recommends that you work with an experienced PaaS company tax expert to make sure sure that you are correctly maximizing the tax minimization strategies available to you.
Advice For PaaS Bookkeeping & PaaS Startups
Technology startup bookkeeping may be a time-consuming process. It may be tempting to place your PaaS company bookkeeping on the back burner and only open your business books when you are under pressure from the IRS or a new investor. Our team PaaS company accountants encourage owners to avoid that temptation and, instead, plan to divide bookkeeping by week and month.
Bookkeeping Suggestions: Monthly Tasks
Categorizing your transactions - Did you run to Home Depot for office repair supplies? Did you pick up a new banner for trade shows? The IRS may categorize these differently, so you may want to categorize them differently while the information is fresh in your mind.
Digitizing your receipts - digitizing your receipts and invoices may also be helpful. If you lose them, you may not be able to prove certain deductions if you get audited.
Reconcile bank accounts - If you reconcile your bank account each month, you may have a better idea of where your business stands. However, you still may need additional help to analyze your data.
Prepare and send invoices - Our team of PaaS company accountants also recommends sending invoices as soon as possible. Letting more than a month go by between the time a charge was generated and the time an invoice is sent for the expense may be costly.
Staying Ahead Of The Competition
If you are noticing that your routine accounting, bookkeeping, and tax planning processes are inefficient, or your accounting team is not executing, it may be time to seek expert help. Fortunately, our team of accountants are ready to assist you. Fusion CPA offers financial services to small, medium-size, and large companies. We offer PaaS company accounting, bookkeeping, and tax planning, and we also serve as PaaS company financial advisers. Our goal is to provide the team, tools, and expertise you need to be an industry leader. So, if your PaaS company is failing to meet expectations, we may be able to help you make a recovery. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.